Price Image Optimization: 5 High-Impact Retail Strategies

So many retailers feel caught between a rock and a hard place because competition is fierce and it feels like you should lower prices to retain and attract shoppers. At the same time, you face pressure to deliver stronger margins.

Successful retailers are more surgical with price moves and invest in lower prices where those investments provide the best return on price image. Price image measures the overall perception that shoppers have of your pricing.

What Impacts Your Price Image?

When shoppers walk out of your store or scroll through your site, they’re not doing mental math on every item they bought. They’re left with a feeling — a sense of whether your prices are fair, expensive, or a great deal.

That gut feeling is price image. And it’s one of the most powerful drivers of loyalty, basket size, and repeat trips in grocery retail.

The tricky part is that price image isn’t shaped by just your prices or your assortment. It’s driven by how shoppers perceive your value overall. Here’s what has the biggest impact on price image:

1. Higher unit movers have a greater impact than lower unit movers
2. Higher purchase frequency has a greater impact than lower purchase frequency
3. Larger basket penetration
4. Driver items have a higher impact than drag items
5. Higher online activity from search, page views, click through, add to cart, and conversion
6. More competitive pressure or more substitute pressure from own assortment
7. Items featured on end caps, displays, and signs
8. Item price relative to reference price derived from competitor prices, market prices, and historical price
9. Retail format and category strategy

Bottom line: shoppers don’t evaluate your prices line by line—they remember how your pricing made them feel. Smart retailers use that insight to their advantage.

How Can Retailers Improve Price Image?

You can’t fix price image with blanket discounts or guesswork. The retailers winning today don’t just lower prices—they target them strategically using data, demand science, and machine learning. Retail science can identify which items have the largest influence on price image.

It starts by analyzing historical sales, online data, and product attributes to identify the products where shopper are more sensitive to the price. Next, price testing is applied to verify results where confidence is low.

Retailers: Maximize your investment in price image by:

1. Identify your price sensitive items. Utilize demand science to identify price sensitivity (elasticity) for each product, store, and customer segment.
2. Determine Key Value Items (KVI). Not all products shape a shopper’s perception. KVIs are generally the most price sensitive and highest moving items in your assortment. Utilize machine learning to cluster the KVI list into Tier 1, 2, 3, for each customer segment.
3. Use price optimization. Establish your KVI strategy (based on profit and revenue opportunity and business rules for competitive position, margin, line structure, etc.) and use price optimization to achieve your strategy for each KVI tier and for each customer segment.
4. Turn to private label. Leverage demand science to analyze product attribute premiums to identify gaps in your private label assortment. Introduce products that provide a higher margin at low prices.
5. Get credit for your best prices. Use signage, promotions, end caps, and displays to draw attention to prices that lead the market.

Most pricing tools stop at elasticity or competitive matching. ClearDemand goes further by combining elasticity, competitive intelligence, and shopper behavior data to identify the products that actually shape your brand’s price image.

With ClearDemand, improving price image isn’t a guessing game… It’s a measurable, repeatable strategy that grows trust, traffic, and profitability.

Discover your profit potential with ClearDemand’s ROI Calculator.